BBC Radio 4 Today Programme, 09 December 2011

I was interviewed this morning on the Today Programme regarding last night’s EU summit talks in Brussels in which David Cameron declared Britain’s official decision to isolate itself from the EU. Britain's isolation from the EU is like someone who refused to join the Titanic before it sailed as there is nothing that guarantees that the euro will survive at all.

You can listen to what I had to say here.

The full transcript of the interview is below.

JUSTIN WEBB: Presenter
Is it a good result for the euro? The markets, Robert Peston was telling us a few minutes ago, have not been too impressed, at least in their early thoughts. Let’s go to Terry Smith who’s chief executive of Tullett Prebon and Fundsmith, and what do you make of it, Mr Smith?

TERRY SMITH: Chief Executive, Tullett Prebon and Fundsmith
What I make of it? I’m not sure that this leaves Britain isolated, we’re still members of the European Community. But if we are isolated, we might be as isolated as somebody who refused to join the Titanic just before it sailed.

JUSTIN WEBB:
It’s still the Titanic?

TERRY SMITH:
Yes, it’s still the Titanic. I mean, there is nothing that guarantees that the euro will survive at all, or in its current form in this. The essentials that would be needed to make that work just aren’t obviously present in the deal that’s being done.

JUSTIN WEBB:
What’s the one big thing, or one or two big things that are missing?

TERRY SMITH:
Well, the one big thing which may be missing is whether or not you can have any central control over the individual governments’ budgets and, of course, that is something that people say is going to be incorporated in this, but frankly, there was already that in the growth and stability pact and it’s not unknown – in fact it’s well known – for a lot of the countries involved to disregard rules.

JUSTIN WEBB:
I haven’t seen this in the details of what was agreed, but certainly before last night one of the differences was going to be that they were going to have to put it into their own internal domestic constitutions as well. But that doesn’t impress you?

TERRY SMITH:
No, not really. I mean, we’ve seen so many proclamations. The new rules to make people behave remind me of the former Labour government’s passing of two pieces of legislation, ‘to bear knife crime’. It was already illegal to stab people. And there are already rules that the countries are supposed to keep to; they’ve disregarded them. So that’s one. The other thing is, I think for the countries at the periphery, who’ve clearly got massive financial problems - including France I might say - whilst they remain in a single currency unit they will never be able to become competitive.

JUSTIN WEBB:
Ah, well, this is the other question, isn’t it, whether…

TERRY SMITH:
It is.

JUSTIN WEBB:
Just assume for a second that they do come together, that they do do the things that they’ve been saying the last few hours that they’re going to do, there is an argument, isn’t there, that actually it’s just the wrong prescription, if you’re doing the wrong things.

TERRY SMITH:
It is. I think it is. I mean, because what it will amount to is central control and more austerity for those countries. I don’t think that you can cure their position by more austerity. Greece cannot become competitive, in terms of its major industries like tourism and agriculture, whilst it’s in a strong currency caused by the membership of Germany. Neither can Italy, certainly the south of Italy, Spain, Portugal, Ireland and France, basically. In my view a single currency unit for those countries is misconceived.

JUSTIN WEBB:
And yet… a final thought, Terry Smith. I mean, you would have heard what the Chancellor said yesterday and a number of people who are in the know about these things, suggesting that the cataclysm that would result, economic cataclysm - possibly political as well but let’s stick with economic - as a result of the euro breaking up, would be so huge that really everything has to be done that can be done to shore it up.

TERRY SMITH:
I don’t think that’s the case really. I mean, if you look at what’s happening economically, as a result of the existence of the euro, it’s not exactly a bed of roses at the moment and it may be, if the only way for those countries to become competitive is for them to leave the euro, the sooner they do it the better. People have left currency unions before: we left the ERM, Italy left the ERM in 1992; we actually had some of our most prosperous years after that.

JUSTIN WEBB:
Terry Smith, thank you very much.

Comments

[kevin]

fraser nelson just quoted you on the world tonite.your a star (and your right) well done keep it up.

[Homeschool on the Croft]

"But if we are isolated, we might be as isolated as somebody who refused to join the Titanic just before it sailed."

This has got to be the quote of the year.... perfect!

[Terry Smith]

To Kevin

Thank you. I fully intend to.

[Terry Smith]

Homeschool on the Croft - thank you.